Wednesday, April 30, 2014

A Facebook friend, Duitch, suggested this design be modified so that the front could be either a wheel chair or a regular bicycle wheel. We noted that there are places in Africa (and other continents) where a bicycle is the best available means of transportation, and where someone who would need to be transported is essentially condemned to stay at home. In such a place, the device shown could be literally life saving, getting patients from rural areas to health services.

It occur to me that a bike that could be transformed into a trike like that shown might be more attractive than either alone in really poor communities. The trike would probably seldom be used, and a bike might be often useful.

There has been a long term effort to develop appropriate wheel chair technology for poor people in developing nations. (Check this for example.) Perhaps the dual bike-wheelchair-trike is an idea might be considered in that context.

The Soviet Union in 1950 had a rapidly growing population of some 150 million people, roughly the same as that of the United States. It remained a middle income country, but had a powerful military machine and had exploded its first nuclear weapon, becoming the second nuclear power in the world. It would within a few years put the first satellite in orbit, and the first astronaut in space.

The Soviet Union had a huge territory, and dominated a number of central and eastern European governments which had Communist governments and traded with the USSR, Of course, the Soviet Union had some degree of influence not only in the so-called satellite nations, but in many countries in Asia, Africa and Latin America.

How Things Have Changed

Communism fell, and in 1991 the Soviet Union broke up in the Russian Federation and 14 independent nations. The Warsaw Pact ended, and many of the nations freed of Soviet domination joined the European Union and NATO. Compare the earlier geographic picture with the current situation of the Russian Federation in the west:

Russia has lost the band of territory of Western Soviet Socialist Republics and Warsaw Pact nations that separated it from Germany (which had been the principle enemy of Russia in World Wars I and II). NATO, which Russians might perceive as their country's most dangerous enemy, was no longer distant, but had incorporated many of the countries formerly firmly under Soviet control.

More recently, the Russian effort to create a common market with Belorus, Ukraine and Kazakhstan ran up against the likelihood that Ukraine would instead join the European Common Market.

In Asia

While Japan had been a rival of the Soviet Union in Asia in the early 20th century, the defeat of China in World War II removed any threat from that quarter. China, when a Communist regime gained full control of the mainland at mid century, seemed a reliable Soviet ally. However, there was a split with China in 1961 and a brief border war in 1960.

Japan was aided to restore its economy after losing World War II, and has become a key ally of the Western Powers. Other Asian countries have emerged as economic powers.

Thus Russia is no longer the greatest economic and military power in east Asia, and no longer might depend on China, which is perhaps now a capitalist competitor in global markets, rather than a Communist ally in a global political competition.

The Change in Russia's Situation

Thus the Russian empire in the 1950s had expanded to a maximum size and appeared to have secured its borders. (Threats from Turkey and Iran, which had been significant in centuries past, were no longer seemed credible.) It had all year ports on the Black Sea and the Pacific. Military threats from Japan had been eliminated, and it had what appeared to be a reliable ally in China.

Today, the empire is much reduced in extent. A significant portion of ethnic Russians now live in foreign lands. While there seems little immediate threat of war with other nations, the barrier of friendly or neutral nations seems much less secure.

Vladimir Putin was born in 1952, when Moscow was the capital of a global power that saw itself competing with the United States. He was educated in schools that were still using curricula based on confidence in Russian power and influence. As an adult he lived through Glasnost, the fall of Communism, and the break up of the Soviet Union. He now finds himself the President of a country that has lost its former empire, and that faces much larger populations and economies, in a capitalist world characterized by global financial and trade patterns.

Russians of his age must be wondering what has happened to the world, and what role Russia has to play in the world today.

Tuesday, April 29, 2014

William Easterly has a book talk on his new book, The Tyranny of Experts, posted on the Book TV website. Easterly is a widely respected development economist who has worked in the World Bank as well as other locations.

In his talk, Easterly seems to confound "development" and "poverty reduction", "democracy" and "human rights", "experts" and "technocratic solutions"; he seems to feel that an approach that recognizes human rights as important per se and leads to democratic rather than autocratic governance somehow does away with the need to technological improvement to attack real health, agricultural and other problems that people and countries face.

Let me make clear that I strongly believe in human rights. As Easterly suggests, poor people in poor countries too often have those rights infringed upon; I believe assuring people of their rights is an objective of development. I recall that since Jimmy Carter became president of the USA, support for human rights has been identified as an objective of both U.S. foreign policy and U.S. development policy. Of course, that concern has not been uniformly honored by all presidents since Carter, nor by all of their administrations.

So too, I believe that governments should be responsive to the will of their people, and should provide a rule of law that helps assure the human rights of their people. Government "of the people, by the people, for the people" is a great democratic ideal. So too, I would like to see my government less supportive of autocratic and coercive governments. Easterly seems to be correct that the world is becoming more democratic. Still, I recognize that in some countries in some circumstances, people have been willing to put government in the hands of "strong men" in the hope of assuring order. In countries with monarchies and dictatorships, those in power will often not want to give up power; they may well will reject aid intended to reduce poverty if it is tied to movements towards democracy, rule of law, and guarantee of universal human rights.

Easterly would like to see the World Bank advocate for democracy and refuse services to countries that are undemocratic. He may advocate that position, but the leaders and staff of the Bank are responsible for carrying out the charter of the Bank and the policies set forth by its member nations. While Easterly may convince the member nations to change the policy of the Bank, but until he and others succeed in doing so, it will continue to act as it has.

More generally, different agencies have different purposes. It would not serve the needs of the world if the World Health Organization or the Universal Postal Union were to refuse to work with countries because of their form of government or even because of the countries; denial of human rights. The insistence by member nations that the international financial institutions act apolitically may be based not only on the self interest of autocrats, but on perception that there is a need for apolitical international financial institutions; major donors and private donors may be perceived as capable of imposing enough pressure to promote democracy without the Bank functioning in that way.

It is touching that Easterly seems to believe that the United States government will subordinate its security and economic interests to its interest in development and/or poverty reduction. Clearly the government of the USA has focused its foreign aid on political objectives. It began aid to Latin America in World War II as part of the war effort, and the Marshall Plan as part of the effort to build barriers to the expansion of Communism. It is no coincidence that in more recent decades it has focused major aid programs on Israel, Iraq and Afghanistan, nor that its major aid program to Egypt was created in support of the Egyptian peace treaty with Israel. So too, some other donors have complex objectives for funding foreign assistance.

The people of the USA seem to me far more willing to support disaster relief than to commit themselves to long range support for holistic development -- what we might call "nation building". Indeed, the electorate seems more willing to support aid that produces great photo ops and sound bites than to deal with fundamentals of building economic, governance, political, or other institutions. They are deeply skeptical of "taxing poor Americans to subsidize rich foreigners" or subsidizing industries abroad that would eventually compete with American industries for markets. The legislative and executive branches of the U.S. government, responsive to the will of the people, fund foreign aid in keeping with those prejudices.

Development versus Poverty Reduction

Individual projects may focus on poverty reduction, but I think of development as being a holistic process "lifting all boats". I suppose people tend to associate national development with improvement in their own condition and that of their families. A government "development" program that helps only the poor while denying economic opportunities to the middle class and to the rich is likely to create class warfare, and unlikely to achieve even its limited goal. (Substitute whatever indicator you like of poverty for "income", and you my doubts remain.)

It also seems to me that development involves social as well as economic objectives and the assurance of human rights. I expect that development will lead to a healthier, more learned population with more opportunities.

Democratization versus Technocratic Projects

Easterly shows a slide in which it is proposed to fight malaria by killing mosquitoes that spread the disease. I would point out that the mosquitoes don't know or care whether you have a democratic or a dictatorial government, nor how fully human rights are protected in a country. You fight malaria by stopping the transmission of the disease. These days you not only spray insecticides, but use bed nets, treat patients, screen windows, and drain water from places mosquitoes breed. Malaria was long ago eliminated from fascist Italy and democratic America (where it was the most serious health problems in the Jim Crow south among the poor). It was not eliminated by arguing for democracy and human rights.

Experts in public health, agriculture, engineering and other fields (yes, even economics) are needed if development is to work.

Of course, in some circumstances, experts can not function to improve people's lives. Some governments are so venial that they will try to appropriate any benefits obtained improving productivity for their members and supporters. In those circumstances aid donors sometimes focus on benefits that can not be appropriated by others, such as increasing child survival.

A dilemma for donor agencies comes in circumstances in which projects can yield benefits to the poor and where a terrible government also exists. I was involved many years ago seeking to allow the export of life-saving drugs to Castro's Cuba. There were a few drugs that were available in the USA, but not in Cuba, which were needed by small numbers of Cuban patients to save their lives; without the appropriate drug, each of those patients would die unnecessarily. Yet the export prohibition imposed by the United States as part of its opposition to the Castro Communist government kept the drugs from the patients who needed them.

That seems to me a prototypical case. Castro's government would suffer a bit from this U.S. policy that resulted in the death of a Cuban citizen. On the other hand, people would die who were in no way responsible for the policies of the Cuban government. It seems to me that in that situation, the drugs should have been allowed to travel to Cuba.

Thus, I believe that there are situations in which the benefits to the individuals targeted by aid projects are so great that the aid should be supplied even when one does not wish to support the government of the country in which they live nor the policies of that government.

A final Quibble

In his talk, Easterly mentions a situation in which the Ugandan government removed people from a forest so that a project with World Bank support could successfully maintain that forest; the project would not only protect biodiversity in Uganda, but would count as counterbalancing carbon emissions in another country (and would receive funding accordingly). This article seems to suggest that the people may well have been living in and disturbing the ecosystem of the forest illegally, and that a serious assessment had been made of the rights involved. I don't know the facts in the case, but it seems possible that the system worked correctly. Sometimes people do act illegally in ways that damage the environment, and in those cases the rule of law should be enforced. Lets not always assume that the guy talking has the rights of the argument without checking on the other view.

So What

Professor Easterly makes an important point. The policies of governments are important in development, and policy dialog with governments to encourage democratic reforms and protection of human rights is an important function for development agencies; that dialog is most effective if backed up with the credible threat of denial of financial aid.

Still, holistic development is a process by which many things must be done well, and indeed improved ways of doing things must be institutionalized. Goods and services will be better produced and distributed, laws will be better made and enforced, people will learn more and better, etc. The process of development is best accomplished when it utilizes expertise. Projects are a useful way of conceptualizing the steps in a continuing, long term process.

Monday, April 28, 2014

I just finished reading Russia Under the Old Regime by Richard Pipes. In the book, the author analyses the evolution of the Russian state from the 9th century to the late 19th/early 20th century.

His approach is I think unique. Each chapter focuses on a specific topic, ranging from the Russian physical environment, to the early history of Russian princes and Tsars, to specific groups such as the peasants and the class serving the state, to the evolution of the institutions implementing the police state. In the process, however, he moves fairly coherently from the earliest days of Russia to the final days of the Tsars.

I was most interested in understanding modern Russia, but had little knowledge of the history of the country. It seems to me that the history since the reign of Peter the Great is the more relevant to modern Russia, that is history since the 18th century. However, I see Pipes' point that modern history is contingent on earlier history; moreover, the stories Russians tell themselves about the early history of their country influence current events.

Pipes argues that Russian history differs significantly from that of western European nations. The Tzar was more autocratic, the aristocracy never had an independent land base, the service class was too dependent on the autocrat to serve as a counterbalance, a bourgeoisie never developed, the church tended to be isolated from western Christianity and supportive of the imperial autocrat, and the vast mass of the peasantry poor, uneducated and oppressed.

The Mongols and Tatars were interested only in extracting income from Russians, supporting the Russian princes who were most successful in bringing them income from the people that they ruled, and perhaps leaving a long lasting Asian imprint on the Russian state. Russia, like the United States, built an empire by expanding into contiguous areas rather than conquering foreign nations; like the USA, it expanded at a vertiginous rate for an extended period of time. Yet it was not able to really administer its eastern territories until railroads and the telegraph allowed reasonable communication between Moscow and its eastern lands.

I suppose that the autocratic rule of the Tsar, derived in part from the models of the Byzantine Emperor and the Khan of the Golden Horde, would have been influential to the end of the Old Regime, and indeed into Stalin's Soviet Union; does it survive in some vestigial form in Putin's administration.

In the 18th century, Peter and Catherine opened Russia to Western models, which had considerable penetration power in any case. The 19th century which opened with the Napoleonic invasion, saw the Crimean War with English and French (Christian) alliance with the Ottoman (Muslim) Empire, effectively ended with the Japanese defeat of Russia in the first decade of the 20th century.

The 19th century saw the ideas of the nation state (unified by a single language and ethnic culture) and the reforms of the 1848 penetrate Russian society. More people received formal education, and more Russians traveled to western Europe. The Tsars allowed magazines to be published and books were both published and imported; Russian literature was created. Pipes points to the Russian Intelligentsia forming, and in that milieu political thought arising (both in support of and opposition to the autocratic rule of the Tsars).

Finally, Pipes traces the rise of the institutions of the Police State in 19th century Russia. A tiny terrorist minority, successful in assassinating some high officials and Tsars, was met by the creation of a police state. Indeed, Pipes identifies many of the procedures institutionalized by the counter-terrorist police forces during the Old Regime as having been replicated in other more modern police states. He notes that in spite of its large size, extraordinary police powers, and freedom from Judicial restraint, the Tsar's security forces were remarkably ineffectual. None the less, the Bolsheviks rapidly adopted the institutions and methods of the police state when they took control of Russia.

The book was first published in 1974. Reading it now, I suspect that Pipes underestimated the persistence of the Orthodox Russian Church, which has rebounded greatly after the Communist suppression of organized religion was ended. So too, the book seems to have provided few clews to the fall of the USSR and the nature of the political and economic systems that have taken hold in Russia in the past quarter century.

Sunday, April 27, 2014

This is the group that won the Peter J Daly prize for a young Celtic music group at the Australian National Folk Festival over Easter. By coincidence the Tolka is the stream that runs through the park near where Peter grew up in Dublin. Peter was my cousin, and his widow Meg created the prize in his honor.

Thursday, April 24, 2014

The long term real growth rate of the U.S. GDP has been 3.68 percent per year. The rate varied. From the late 1870s to the crash of 1893 it was notably higher, as it was in the 1930s and during World War II in the recovery from the 1927 crash.

Thomas Piketty in his book Capital in the Twenty-First Century suggests that the average return on capital is about 5 percent. When that is higher than the growth of the GDP, more of that growth goes to return on capital and less to wages; when the return on capital is less than the rate of growth of GDP, then more of the increase goes to wages and less to capital.

So the rich get poorer when there is a crash, but recover wealth during the recovery. If Piketty is right, the rapid accumulation of wealth in the last few decades is in part due to the inability of the U.S. economy to sustain high levels of economic growth. (Some argue that the conservatism of the very wealthy and their increasing political power keep growth low.)

Cellphones have made books more accessible than ever before in developing nations. In a world where 10% of adults can't read or write, mobile technologies hold the promise to combating the scourge of illiteracy, and thus improving lives everywhere. * NEW study on the "Reading Revolution"http://ow.ly/w5UWL* FULL INFOGRAPHIC: http://visual.ly/reading-mobile-era

This is our local celebration, held on Sunday so lots of people can come out to see it. We went last year and had a good time.

Sunday April 27th 2014, 11am-4pmHoward Avenue, Old Town Kensington, MdCelebrate the Book * Street Festival * Rain or Shine

Wednesday, April 23, 2014

Check out the great visualization site provided by Bloomberg. Even if you don't want to find out about American mortality rates (which plateaued due to the aging of the population -- all age groups continued to have lower death rates).

There is an interesting book review by Jeff Madrick in the New York Review of Books. It deals with two books on innovation. It got me thinking about how the U.S. government promotes technological innovation.

It supports fundamental research. Sometimes there are spin-offs from fundamental research projects that have commercial value, as when a research instrument created in a fundamental research project turns out to have a market. Probably more important, sometimes the fundamental research leads to important discoveries that in turn provide the basis for new technologies; thus the study of electricity led to an entire electrical technology, as the study of solid state physics led to semiconductors and the ICT industry, and the study of nuclear physics led not only to nuclear weapons, but nuclear power.

It also supports technology development, often in the aerospace industry, required for federal government use. Production of weapons based on government technology is obviously big business. However, there are many spin-offs from military technology development. Think for example of the improvements in trauma medicine that come from military medicine, but are widely applied in civilian life.

It supports technology development in areas where there are market failures. The success of the agricultural stations of the Land Grant College system in developing technologies, or in weather prediction technology are notable. Think of the technology developed by government for public goods, such as roads, flood control, etc. These technologies have significant economic value, but that value is seldom appropriated by private firms (with exceptions such as construction firms using government developed technologies in foreign contracts).

It sometimes provides direct support for civil technology development. In the R&D programs that I was involved with in the foreign assistance program, we funded development of a diagnostic reagent for Lyme Disease. One of our funded researchers discovered a new class of nitrogen fixing organism that is symbiotic with sugar cane, and which is widely used to reduce the need for fertilizer in sugar cane fields in Brazil.

It provides tax financing for private firms investments in technology development. Thus tax breaks for those investments may make them more affordable by firms.

Of course, it provides intellectual property protection for technology developed in any source, again facilitating the processes by which technology developers recapture the costs of their R&D, and the profits that provide incentives for technology development and commercialization.

It provides funding for academic and governmental partners in R&D programs, notably those in which commercial partners plan to utilize the technology developed.

Some of these approaches are found in developing countries on a small scale. Others will surely be more fully utilized as countries develop manufacturing and modern service industries.

Point 1: Every one of Ariely's experiments is based on the dishonesty of the experimenter. He no doubt justifies this by the view that "a little white lie" is justified by the scientific importance of the experiment.

Point 2: When you participate in an experiment designed and managed by a psychologist, you can be pretty sure that the pre-participation explanation you got was not an accurate statement of what the psychologist was actually looking for.

In the test Ariely described involving solving as many arithmetic problems as possible in a short time, participants should have recognized the investigator was not interested in measuring the speed of arithmetical calculations. So I suggest that one should give the researchers something interesting to think about. Either:

refuse to participate, walking out immediately, but taking the paper with one to see how interesting the problems were on one's own time.

immediately announce that you had solved all the problems, shred the blank paper, and walk out with the money.

Men born in 1940 had a longer life expectancy at age 55 than those born in 1920. That was true for women in the upper income level, but not for low income women. The poorest ten percent of women born in 1940 at age 55 had two years less life expecancy than the similar cohort born in 1920.

While women live longer on average than do men, men at all income levels saw a greater increase in life expectancy at 55 than did women.

Of course, to get reasonably good estimates for life expectancy at 55, you have to go back to cohorts born many years ago. That is why the data is for cohorts born in 1920 and 1940.

Sunday, April 20, 2014

Agnotology(formerly agnatology) is the study of culturally induced ignorance or doubt, particularly the publication of inaccurate or misleading scientific data. The neologism was coined by Robert N. Proctor, a Stanford University professor specializing in the history of science and technology.

Saturday, April 19, 2014

There is an interesting article by the National Women's Law center. It reflects some of the data which shows gender discrimination against women, and that black women face even more discrimination in the workplace than to white women.

A lot of that discrimination seems likely to be unconscious in today's organizations. The people making the discriminatory decisions probably would not only deny bias, but be unaware of the bias. There is some reduction that organizations can make in reducing such bias. Objective tests might be used in hiring and promotion; resumes might be blinded -- the names and other indicators of gender removed. Managers might receive sensitivity training, and might be disciplined if the data suggest that the are discriminating. However, I would expect progress to be slow.

I suspect that couples make decisions that one person will sacrifice income to do more unpaid work, while the other person will do less unpaid work to maximize monetary income. Thus one may stay at home with pre-school children while the other works and advances his/her career and pay level; one may be responsible to leave work and take care of family or home emergencies while the other stays at work. Often these decisions act to the detriment of the woman's monetary income and favor that of a man's. (If the woman's pay rate is lower than that of the man, as seems common, then it makes economic sense to forego the woman's pay rather than the man's.) Increasing wages equity for women might lead to these family decisions more often favoring a woman's monetary income.

I note the following however:

A study by labor economists Francine Blau and Lawrence Kahn found that when you look at the combined effects of occupation, industry, work experience, union status, race and educational attainment, 41 percent of the wage gap remains unexplained.

Occupational segregation – the fact that women and men are concentrated in different occupations – contributes to the wage gap.

Note that 59 percent of the variance in the Blau and Kahn study is due to the named factors. Thus having women work in higher paid occupations, in industries with higher pay profiles, with more work experience, more often as union members, and with more education will be likely to help increase their monetary income. Those are long term goals, involving working with young women and girls to prepare them for more remunerative careers, as well as opening opportunities for women with the required qualifications.

“Oh, yeah? Guess what.” The evidence for a sharp rise in inequality, a definitive break with the three postwar decades, was overwhelming.

“Oh, yeah? Guess what.” Actually, rising inequality was in large part about the rise of a tiny elite, the one percent and within that the 0.1 percent.

“Oh, yeah? Guess what.” We don’t have Gilded Age survey data, but we do have tax records back to the early 20th century, and top income shares are right back at late-Gilded-Age levels.

“Oh, yeah? Guess what.” What Piketty shows is that inherited wealth has been making a comeback, that it’s already a much bigger factor than most people even on the left realize, and that it’s on track to become much larger still.

(S)ix of the ten wealthiest Americans, according to Forbes, are Walton and Koch heirs; further down the list are a lot of old men, who will soon be passing their wealth on.

(W)e may face a political-economy spiral of inequality, in which great wealth brings great power, which is used to reinforce the concentration of wealth.

(T)his analysis isn’t just important, it’s beautiful. Piketty gives us something we didn’t know we needed — a sweeping, elegant integration of growth theory, the factor distribution of income, and the personal distribution of income and wealth.

The chart shows the standard indicator of Gross Domestic Product per person as Purchasing Power Parity versus a new indicator of Social Progress. It makes the point that economic development is not necessarily a good measure of how well folk are living. Of course, very poor countries tend to have worse performance on the social progress index than do very rich countries (e.g. Chad versus Norway). But consider Angola versus the Philippines; Angola has slightly higher GDP per capita, but the Philippines are rated much higher on the Social Progress Index. Similarly consider Costa Rica versus Kuwait. Kuwait is much richer than Costa Rica, but the two have very similar measurements on the Social Progress Index.

Timothy Taylor, in this blog Conversable Economist, has an interesting post on the length of the long waves of technological innovation that come from the introduction of major new technological systems. He highlights the replacement of mules by tractors in the United States over a 50 year period. During that long period, tractor designs got better, sales and maintenance networks expanded, fuel became more available, and farmers learned how to use the tractors; mules correspondingly become less competitive on a financial basis. I suppose farms got bigger as mechanized farmers could handle bigger farms. He does not measure the introduction of hybrid crops and continued increases in use of inputs, which also led to higher costs of farming and higher profits.

His second example is the diffusion of electrical power.

He points out that in the Paris Expo of 1890, large scale electric lighting was demonstrated, as were many electrical devices. Still it took decades for factories to introduce electric motors for their many machines, and decades for the extension of the electrical grid to all homes. Part of the delay of course was in the design, development and commercialization of electrical equipment for factories and homes. So too, there was a natural process in which most people waited to see others experiment with the new technology and prove it useful before they too invested in electrification.

Taylor makes the point that the Information Revolution may have some time to run. Computers have been around since World War II, but they continue to become more and more cost efficient. The Internet has been around for decades, but we expect to see the Internet of things provide new growth. Mobile phones are just the most recent aspect of the development of telecom technology, but the linkage of mobile phones and the Internet is creating a huge market for apps and new apps will be transforming traditional sectors. All of course are dependent on the transistors and chips, and the revolution in transistor technology is continuing.

Prediction is very difficult, especially about the future.Niels Bohr

What other technological revolutions are going on now, or can we expect to heat up within the next few years.

Biological technologies: genetic engineering and other aspects of biotechnology, with the addition of genomics will continue to contribute to agriculture, forestry, and medicine. Indeed, one might expect new industrial applications, applications in mining, etc.

Robotics and the application of computer control, computer aided design and computer controlled manufacturing, together with 3D printing should continue to change manufacturing, and should expand into other fields (such as housework).

Nanotechnology, exploring the properties of tiny devices and nano-scale behavior of materials should spawn new devices, and thus new industries to produce those devices. Of course, electronics is already heavily committed to manufacturing devices that take advantage of nano-scale devices and nano-scale phenomena.

The technology of neurobiology. Of course medicine is already using some scanners and some drugs, but the science is developing rapidly, and I expect to see many inventions arising from our new knowledge of the brain and nervous system that will not only improve mental health, and provide help for people with neurological disabilities, but which may also enhance normal abilities.

Remote sensing and space technology: unmanned vehicles in the air, on land and in the sea will be used increasingly to obtain information, and computers will be used to analyze the heavy flow of that information, providing much more information on the world. As space technology improves, new applications will be found.

Wednesday, April 16, 2014

Many years ago I left graduate school to participate in a health planning research project in South America. Before I left I had a chance to meet with a number of the faculty members and talk about the challenges I would be facing. One of them asked me how I would handle dealing with people with very different values about health in my new job.

I was pretty naive at the time. I still believe that there is a great deal of commonality in our values about health and illness. Those who differ from the norm seem to be aberrant. Only a small portion of the population commit suicide. People who seek pain are termed masochists. We came across people who sought out the death of their children, but seemed to do so in desperation facing extreme difficulties in raising them. The vast majority of people would rather be healthy than sick, would rather not face disabilities resulting from past illness, would rather live a long, healthy life than die early. Indeed, helping poor sick children even when they are strangers seems a widely shared value.

We did not discuss the larger question of how health planners deal with conflicts of interests. The tax payers who would rather not be taxed to pay for health services for the poor, the property owners who don't want health facilities located where they might reduce the value of their property, the health workers who want to work in pleasant locations rather than where they might be more needed, the vendors of drugs and equipment who want to maximize their sales and income rather even when doing so may not be the best use of money available for health services, and even the people who steal from health facilities all have objectives other than improving public health.

Of course, there remain issues. The World Health Organization has proposed "Disability Adjusted Life Years" (DALYs) as a good measure of health outcomes for a population, but that is a pretty rough indicator. The Pan American Health Organization long ago included a measure of "transcendence" in its planning methodology to reflect the fact that people (and electorates) are more concerned with some diseases than with others; polio was such a disease in the United States when we had a polio afflicted president and a March of Dimes to fight the disease. What rights to people have to health services, or to health? How does a health service system respond to the fact that health and sickness are often the result of factors outside of medical control?

In point of fact, working as a health planner at increasingly central levels I did find myself facing the second kind of value conflict -- personal benefits conflicting with public. However, it was generally a good approach to assume that I was focusing on improving the public health, reducing sickness and disability, extending life. I was lucky enough to find myself working with others who shared those values. Sometimes we were able to help advance those objectives.

As a health planner I was generally providing information to others who would make the decisions, and dealing with fairly limited issues. I was able to help people make a better decision as to where to build a city hospital, helped design a loan to build a rural health service (which succeeded in cutting child mortality in its service district in half in five years), and helped the World Bank and later the Carter Administration raise the importance of health in the foreign aid portfolio.

I suspect that other "sectoral planners" working in areas such as education, housing and transportation do well be keeping their eyes on the nominal objectives for their sector -- providing an effective service in a cost-efficient manner.

Of course, a harder problem comes for those at the top who are trying to balance many rights and many needs with a limited budget. and given relative freedom to innovate and move resources from one area to another, but forced to negotiate which many interests in developing final portfolios of legislation and programs.

He asks why the World Bank and others seem so cocksure that extreme poverty can be ended by 2030. I take their promise to be fluff intended to con donors into continued or increased funding to fight poverty. I fear that extreme poverty will still be with us in 2030, and that a lot of poverty that the World Bank defines as not to be extreme is very serious indeed.

He notes that a lot of funding categorized as development assistance is actually funding for "global public goods". Much of that funding would go for prevention of climate change and other environmental deterioration. I would note that some of the efforts to fight communicable diseases (such as the eradication of polio) might also be included as a global public good -- the benefits of eliminating the polio in the last few countries in which it is currently found will be enjoyed worldwide.

There would seem to be no argument against the countries with the most money spending some of that money globally to "buy" global public goods. We regularly use progressive taxes to pay for public goods.

Reisen would seem to be concerned that such funding is being labeled "development assistance" when it is actually intended for another purpose. I see that point. Still, developing countries too will benefit from those global public goods, and in many cases their people are more vulnerable to the deterioration of those goods.

Of course, in some cases we can have our cake and eat it too. Thus, for example, investment in energy efficiency can be a cost effective investment even without including the external benefits of reduced greenhouse gas emissions. So too, the investment in hydropower rather than fossil fuel generation plants may produce lower cost electricity as well as prevent greenhouse gas emissions.

I am afraid that I believe that the world will not do the right thing and reduce greenhouse gas emissions as much as we could or should. Indeed, I believe we will see deforestation, desertification, loss of top soil, destruction of coastal zones, depletion of water resources, air and water pollution, and other environmental destruction that we could and should have prevented. Investments now to help poor people in poor countries to prepare to deal with this onslaught will help avert future poverty and thus be perhaps a legitimate form of development assistance.

Is there an argument that donor nations can provide more money for poverty reduction and global public goods by deliberately mislabeling some of the global public goods funds as development assistance? In the USA, the climate deniers might have more sympathy for international expenditures labeled "development assistance" than for those labeled "climate change prevention and amelioration".

As an aside, it seems to me that "poverty alleviation" is one aspect of "development assistance", but only one aspect. Social and economic development would seem to me to be best seen as "a tide that lifts all boats". Thus I see development as involving capital accumulation, which seems always to result in the rich getting richer, the middle class getting "better off", with relatively little of the capital being accumulated by the poor. I also see general development of poor countries involving their increased competitiveness in global markets, and increased competition from the recipients (current or former) of foreign aid has not been popular with U.S. producers.

Let me end by quoting an especially useful part of the posting:

Assessing vulnerability which is independent of present policy is needed both to identify the most vulnerable poor countries and to design criteria for the allocation of international resources. Two kinds of vulnerability and the corresponding indices can be considered:

1. A detailed presentation of EVI can be found in Patrick Guillaumont (2011), The concept of structural economic vulnerability and its relevance for the identification of the Least Developed Countries and other purposes (Nature, measurement, and evolution), UN-DESA, CDP Background Paper No. 12, ST/ESA/2011/CDP/12 ,September.2. Patrick Guillaumont (2013), “Measuring Structural Vulnerability to Allocate Development Assistance and Adaptation Resources”, FERDI Working Paper No. 68, Ferdi: Clermont-Ferrand, March.3. For detail, see P. Guillaumont and C. Simonet (2011), “Designing an Index of Structural Vulnerability to Climate Change”, FERDI Working Paper I.08, March.

Tuesday, April 15, 2014

I admire Neil deGrasse Tyson. Given his day job, he is almost certainly a respected astronomer. He is clearly a fine popularizer of science, communicator of scientific knowledge to the general public. I am not sure I trust his judgment on "soaring spiritual" experiences.

On the other hand, it represents a great intellectual achievement. It ranks with the idea that the modern landscape is the result of natural processes that raised mountains and then washed them away, created seas and then dried them up, Another idea of similar importance is that efficient markets can find prices that reconcile supply and demand for goods (as it were) naturally, without the intervention of a central planner. I put it in the same class with the idea that the larger a statistical sample, the more closely its average value will approximate the mean of the distribution from which it was drawn; a similar idea is that the children of individuals who differ greatly from the mean in some way will tend to be closer to the mean than their parents. Homeostasis is another idea from science, suggesting that order may be maintained by natural processes -- an idea that is linked to modern engineering control theory.

Before the Enlightenment and the Scientific Revolution, people assumed that all order was achieved by some intelligence imposing that order. We now understand that in some circumstances order can arise and/or be maintained without planning. That teleonomic processes are possible as well as teleological ones.

Saturday, April 12, 2014

The United States, as the world's most powerful country, is probably never going to be popular with everyone. Under the Obama administration, no more than a quarter of respondents from this poll taken in 150 countries have disapproved of U.S. leadership, compared with more than one-third of respondents in the last year of George Bush's presidency. Last year 46% of respondents approved of U.S. leadership, while 24% disapproved -- both better grades than received by the Bush administration.

A few weeks ago, as part of a larger condemnation of Obama presidency, Mitt Romney insisted the last five years have been awful for the United States’ stature around the world. “It is hard to name even a single country that has more respect and admiration for America today than when President Obama took office,” the failed candidate said, adding, “Our esteem around the world has fallen.”

For the right, this is a common line of attack. Tea Party favorite Ben Carson recently argued, “Russians seem to be gaining prestige and influence throughout the world as we are losing ours.” Former Vice President Dick Cheney said on “Face the Nation” a month ago that America’s willingness to keep our commitments has been “in doubt for some time now” around the globe “because of the policies of the Obama administration.”

I see two possibilities.

Republicans don't understand how the United States is regarded abroad, or

Republicans don't tell the public the truth about the improvement Obama has made in our image abroad.

Of course some may be badly informed, some may be speaking 'politician speak", and some may have another explanation.

Robert Reich posted something interesting on Facebook. The post included the pie chart above, and a text, from which I quote:

(C)onsider that four of the largest tax expenditures in the tax code – the preferential rate on capital gains, the home mortgage interest deduction, the deduction for property taxes, and employer-provided health care -- overwhelmingly benefit the richest 1 percent, who receive nearly a third of these benefits. Middle and low-income households get less than 5 percent of them. Last year, people making more than $1 million saved $96,000 on their taxes because of them. The poorest fifth of income earners saved less than $5.

Capping these tax breaks at what the typical family saves from them would generate several hundred billion dollars a year -- which could be used for education, infrastructure, and reducing the public debt. Why won’t Republicans accept this? Why aren’t Democrats pushing for it?

I have long thought that there should be a cap on many kinds of deductions. Why is it good public policy to encourage people to take on huge debts to buy mansions? While I think it makes sense to consider the current value of past investments while calculating capital gains, I don't see why it is good public policy to provide incentives for taking profits from investments after a year or two.

A Washington Post article was shared on Facebook today, dealing with a new plan by which the federal government will "reclaim" old debts by impounding income tax refunds.

Across the nation, hundreds of thousands of taxpayers who are expecting refunds this month are instead getting letters.........informing them that because of a debt they never knew about — often a debt incurred by their parents — the government has confiscated their check.

The Treasury Department has intercepted $1.9 billion in tax refunds already this year — $75 million of that on debts delinquent for more than 10 years, said Jeffrey Schramek, assistant commissioner of the department’s debt management service. The aggressive effort to collect old debts started three years ago — the result of a single sentence tucked into the farm bill lifting the 10-year statute of limitations on old debts to Uncle Sam.

In theory, the government should be able to prove that such a debt existed, and that the person from whom they collected the debt was indeed liable for it. The government position seems to be "possession is nine-tenths of the law" and we have the money. Apparently money is being collected in payment of debts that the government can not document. It is being collected from children of the persons who are claimed to have incurred the debts, without proof that the children in fact benefited from the funds. The feds are impounding the tax returns without prior notification. In one case described in the article, more was impounded than was owed by the tax payer's parent.

In the 60 years after World War II, the United States built the world's greatest middle class economy, then unbuilt it. And if you want a single snapshot that captures the broad sweep of that transformation, you could do much worse than this graph from a new Pew report, which tracks how average family incomes have changed at each rung of the economic ladder from 1950 through 2010.

Note that a few percentage points change in income for the top 5 percent is a lot more money than a few percentage points for the bottom fifth. It was, of course, in 1980s and 1990s that the rich got much richer. The 70s were the years of the oil shocks and inflation. The crash at the end of the first decade of this century saw incomes go down for all groups, but the stock market recovery of the last few years has made the rich richer.

Last year developing countries received $134.8 billion in aid, the highest ever, according to the OECD’s Development Assistance Committee (DAC)........The United Arab Emirates increased aid fourfold, chiefly to help Egypt. It gave the most as a share of its income. America gives less than 0.2% of its GNI

France, Germany and the United Kingdom, with a total population among if 210 million them gave $43.4 billion while the USA with a population of 313 million gave $31.5 billion. The GDP per capita of the USA is 53,101; those of Germany, the UK and France are respectively 40,007, 37,307 and 35,784 (all in international dollars).

Thus the USA, while richer than our European allies, gives much less than they do to alleviate poverty in Africa, Asia and Latin America. The excuse often given is that we spend much more on the military than do the European countries. I think it is that the Congress will not give more because of the views of the more isolationist members, and because the voters don't know how uncharitable the country actually is.

Friday, April 11, 2014

Mother Jones magazine offers an interesting set of graphs on the American economy, including the one shown above. Note that productivity (which I assume is labor productivity) has been increasing at a reasonably consistent rate for decades, while wages have not kept up. On the other hand, the average income of the top one percent is now several times greater than it was in 1979.

Labor productivity is improved generally by improving technology or by increasing capital investment per worker. Of course, the improvement of technology often involves capital investment (e.g. better, more expensive machines, or training and education in human capital).

I understand that this is consistent with a theory put forth by Thomas Piketty as described in this article:

The ratio of wealth to income is rising in all developed countries.

Absent extraordinary interventions, we should expect that trend to continue.

If it continues, the future will look like the 19th century, where economic elites have predominantly inherited their wealth rather than working for it.

The best solution would be a globally coordinated effort to tax wealth.

Piketty suggests that the return to capital has been about 5% per year for centuries. If the GDP grows more slowly than 5% per year, the rich get richer, and the rest lose economic ground to the rich. Clearly the average rate of growth of GDP in the USA and other developed countries has been less than 5% per year on average for the period in question, and clearly the rich have been getting richer.

Thursday, April 10, 2014

The Chicken Kiev speech is the nickname for a speech given by the United States president George H. W. Bush in Kiev, Ukraine, on August 1, 1991, months before a December referendum in which Ukrainians voted to withdraw from the Soviet Union, in which Bush cautioned against "suicidal nationalism"

Tuesday, April 08, 2014

The Washington Post published an article describing a survey of more than 2000 people on what we should do with respect to the Russian takeover of Crimea and the threat to Ukraine. As part of the survey, people were asked to locate Ukraine on a world map. The points shown on the map above show their responses. Clearly most were guessing, and only 16 percent got the location right.

I think it is frightening that some Americans think Ukraine is in Australia, some in Africa, some in South America, and some in the United States.

What is really frightening is that the worse the guess on location, the more likely the respondent was to think the United States should respond militarily. Thus a large part of the U.S. population apparently has no idea even where Ukraine is, but would commit U.S. forces to its defense. Ignorance is not a good basis for foreign policy decisions!

CNN, Fox News, and MSNBC are the most widely watched cable news networks in the U.S. Their coverage of climate change is an influential source of information for the public and policy makers alike, but their accuracy varies significantly. All of them can take steps to improve their coverage of climate science: http://ucsusa.org/scienceorspin

The Union of Concerned Scientists -- formed after the development of the Atom Bomb and gained fame as the publisher of the Bulletin of Atomic Scientists -- is a distinguished scientific organization. One of my former colleagues is there. They are likely to be very good in judging the quality of information provided by the news networks.

College graduates aged 25 to 32 who are working full time earn about $17,500 more annually than their peers who have only a high school diploma, according to the Pew Research Centre, a think-tank.

We know that different students learn different things in college. To pervert Gertrude Stein's famous line, a college education is not a college education, is not a college education. A degree given to someone who majors in romantic French poetry in a third rate school is not the same as a degree in Engineering from MIT or Cal Tech, nor is either the same as a degree in Economics from an Ivy League university.

The graph shown to the right is from an article in the new issue of The Economist. The blue lines show average costs of degrees (after financial aid) from various universities, and illustrates how much they differ one from another. The boxes on the right show the financial returns from a degree at the same colleges, showing that in many cases it would be better to put the money in a financial investment, and in some cases they returns are negative.

The estimates of rates of return are made comparing people with degrees versus people who did not attend a university, and the article makes clear that the people themselves may be different. I would suggest that people who get to the university may be more motivated or more capable, and thus likely to earn more, or they may be from better connected families and more able to benefit from family connection.

An engineering graduate from the University of California, Berkeley can expect to be nearly $1.1m better off after 20 years than someone who never went to college. Even the least lucrative engineering courses generated a 20-year return of almost $500,000.

Arts and humanities courses are much more varied. All doubtless nourish the soul, but not all fatten the wallet. An arts degree from a rigorous school such as Columbia or the University of California, San Diego pays off handsomely. But an arts graduate from Murray State University in Kentucky can expect to make $147,000 less over 20 years than a high school graduate, after paying for his education.

The article focuses on how the future earnings of college and university students increase as a result of the higher education that they receive. It does not seek to measure:

benefits obtained by the student other than increased earnings

benefits obtained by society but not appropriated by the student as future earnings.

Both kinds of benefits can be significant.

Does the college education allow the former student to get a job which is not only better paid but more satisfying. Does it allow him/her to live a more fulfilling life outside the workplace? Is he or she a better marriage prospect, and thus likely to find a superior marriage partner? Do the children of college graduates do better (in health, education, or careers) than those of people who don't attend college?

Does that university make the graduate a better voter, a more effective participant in community activities, or someone whose work contributes more to the profits of the owners of his company? Public health physicians are, in my mind, people who contribute much more to society than they receive in compensation, as do civil engineers and good teachers.

While students and their families should consider the costs and benefits to themselves of university education, governments should consider the benefits to society and provide subsidies for students and departments related to the those social benefits not appropriated by students.

I would much rather Americans understood more science than they do, but I wonder about articles such as this one which purports to describe that knowledge.

Here is the date provided by the article on question 7 of 10 ("The universe began with a huge explosion" for which the article states "Correct answer: True")

Current theory is that the universe began as a tiny thing composed of a "soup" of energy. It then rapidly inflated, essentially creating space. That inflation continues today, creating the appearance of galaxies flying apart. This has popularly been termed "the Big Bang" theory of the creation of the universe, and I suppose that "explosion" is a reasonable metaphor for what happened, but the creation of the universe was not an explosion in the sense we normally use the term. The original substance of the universe changed as space expanded and that substance expanding, cooled. But that doesn't seem to be an "explosion".

Another example: "10. Human beings, as we know them today, developed from earlier species of animals Correct answer: True"

Apparently many Americans know that the theory of evolution exists and that it is accepted by science -- can in fact explain it reasonable well -- but do not accept evolution as it conflicts with their religious beliefs. Thus people have the knowledge of the theory of evolution that the question seeks, but the question does not test for understanding but for belief.

If you feel better believing that people everywhere know very little about science, I suppose you can go ahead and continue believing that. It probably doesn't do much harm to do so. But I am not sure that the questionnaire used by the NSF and described in the article provides a good index of such knowledge.

There are people -- calling themselves conservatives but I think of them as reactionaries -- who seem not to understand that institutions change. I suspect that institutional changes that survive do so because the are useful, at least to those who have the power to accept or reject the changes.

The United States of America was founded not only as a new political institution, but a new kind of political institution. It was explicitly created to guarantee the human rights of (a class) of its citizens. Its leaders were neither hereditary monarchs nor hereditary aristocrats; they were to be elected. U.S. political institutions have changed beyond recognition. Political parties were established. Senators came to be popularly elected rather than chosen by state legislatures. Suffrage was extended broadly. The functions of government were greatly expanded, and correspondingly the number of government functionaries grew to be greater than the original number of citizens of the USA. "Small d" democracy has since spread to many countries.

The Industrial Revolution led to machine based manufacturing, and economies of scale; the more a factory produced, the lower the cost per item produced. Combined with the invention of the steam engine, railroads and steam ships as well as mass circulation magazines and newspapers led to huge markets for cheap manufactured goods. The institution of the business corporation responded with the creation of more and larger corporations as nations went through the industrial revolution. This in turn led to the the extension of the role of government institutions to regulate large corporations.

The institution of slavery existed in every colony at the start of the American Revolution; while northern states abolished slavery themselves and the nation as a whole abolished importation of slaves, it took the Civil War to emancipate the slaves. While some of the ideology of the abolition movement was that favoring "free labor", many supposedly free workers were indeed "wage slaves" in the 19th century, living in desperate poverty with little real freedom. Eventually new institutions -- unions and the labor movement -- were created to empower workers in response to the growing power of the corporation.

The U.S. economy experienced boom and bust cycles from the foundation of the country, culminating in the stock market crash of 1929 and the Great Depression. There was then a major reform of the financial system and decades of relative economic stability until deregulation occurred starting in the late 20th century. The Crash of 2008 and the Great Recession lead to new regulation. Thus U.S. economic institutions have been in flux. Note too, that the Breton Woods System for international finance was created in the aftermath of World War II.

We have seen the growth of a global telecommunications infrastructure, the Internet, and the infrastructure of computers and smart phones induce major changes. Production systems and markets have globalized. Corporations have focused on core competencies, tending to outsource functions via new markets. Industries have been restructured; enterprises re-engineered.

A lot of these institutional changes have tended to benefit the average person. A lesson of history is that progress is not a necessary attribute of institutional change.

I have been reading Russia under the Old Regime by Richard Pipes. The book analyzes the evolution of the Russian society from the 9th century to the 1880s. The empire expanded very rapidly. The story is of a decentralized society becoming centralized, under a theory that the tsar owned everything. Almost all people were reduced to roles of servants of government, serfs or slaves, deprived of freedom of movement and required to provide taxes and service to the state controlled by the tsar. Laws enforced by the tsars sought to assure the flow of taxes and services; failing to inform on someone breaking those laws was itself a criminal offense. I can only assume that the long term effect of these institutional changes was a grave reduction of human rights of the average person living in (what became) imperial Russia.

So how do we respond to institutional change. Assuming that the institutions of the Roaring 20s or some other idealized ""Golden Age were suitable for today seems inappropriate; often the people proposing such revisions have overly rosy views of life in the past. Moreover, institutional models that worked adequately in the past may not be up to the challenges of modern society.

Perhaps we should do the obvious. Try out institutional changes that pass the tests of our best analysis and prediction, and see how they work. They accept those which improve the situation for a while, but reject those institutional innovations that have too many adverse side effects.

I also recently read The Reformation: A History by Diarmaid MacCulloch. In the context of this blog, the book can be seen as a discussion of changes in religious institutions in Western Europe, primarily in the 16th century. A number of Protestant churches emerged from the Reformation, each based on somewhat different modifications of Roman Catholicism. The Counter Reformation of the Roman Catholic Church also saw major changes in that institution. There emerged new relations between state and church, with different churches becoming the established state churches of different states. Indeed, the separation of church and state in the United States can be seen as a later result of the Reformation and Counter Reformation.

One problem, of course, is that this period of modification of religious institutions was very bloody, involving such events as the St. Bartholomew's Day Massacre and the 30 year war. How do we invent and test institutional reforms, discarding those which seem to fail the test of progress, in a decent and peaceful way?

I think there are many examples of problems with the current operation of our institutions. Wealth is becoming more concentrated, middle class progress has stalled and there are still too many poor. The political process has elected a Congress that has gotten almost nothing done since being elected. The USA spends the most of any country on health care, but has only middling life expectancy. Far too many people are in jail, too few young people seem to excel on tests of educational accomplishment.

It is hard to realize that institutions can improve. We know that they can deteriorate, but it is perhaps hard to see that they can be different and better in the future than they were in the past. Perhaps that is because our knowledge of how institutions work is tacit rather than explicit; perhaps it is because institutions have tended to evolve slowly compared to our consciousness; perhaps it is because institutions evolve in a social context, almost always characterized by conflicting ideas of how they should be structured and how they should work. Still, our objective knowledge demonstrates that societies have managed to improve institutions in the past. There is little alternative but to try to improve ours now.